Friday, January 27, 2012

I'm writing to recommend you propose a new regulation in Germany to mandate that all new large appliances come with a "Grid Chip" and "Smart Start" button. The grid chip (or governor chip) would measure frequency/voltage and respond to system reliability issues when required. The idea in a nutshell is that if frequency dipped to 49.9 Hertz your washing machine (if running) would power down until frequency recovered. We have existing load shedding protocols which you could use as a guideline for developing the frequency response logic for appliances. I believe the cost should be marginal.

The reliability rules would be hardwired into the "grid chips" but you'd also want to be able to control the appliance according to user input. This is where the Smart Start button comes in. With the feed-in rates now lower than retail electricity it is in the end-user's best interests to directly consume as much electricity from their PV system as practical. If all new appliances had governor chips and a smart start feature you'd greatly simplify the implementation of home energy management. If you can raise direct consumption from typical 30% rates up to 50% it will allow the photovoltaic industry to be more competitive and survive with significantly lower Feed in rates. Ultimately I believe you can drop the FiT down to a market based rate but to do that you need to have it so that direct consumption is maximized. People without PV system would still benefit from a Smart Start feature by utilizing time of use electricity rates.

I believe this new appliance standard would create a home market for a technology that Germany is uniquely able to develop and eventually export. I have no financial stake in any company developing any of these technologies I've recommended. I'm a grid operator in an electrical control room in Wonderland who happens to enjoy watching the progress Germany has made with wind and photovoltaics. I believe it's critical for Germany to integrate load management into your renewable energy strategy - the sooner the better. You've changed things before... Here's another opportunity.

Monday, January 16, 2012

A contingency is the unexpected failure or outage of a system component, such as a generator, transmission line, circuit breaker, switch or other electrical element. Power system operators maintain constant vigilance against contingencies by operating the system with safety margins and backup plans. Part of the backup plan is to have power plants waiting in reserve - we call this contingency reserve (AKA: CR). While a complete taxonomy of CR is beyond the scope, the two basic varieties of reserve are spinning and non-spinning reserve.

Vocabulary Intermission part 1

Spinning Reserve: Unused capacity available from units connected to and synchronised with the grid available to respond instantly to system requirements. A 500 MW power plant operating at 400 MW provides 100 MW of spinning reserve to the system.

Non-Spinning Reserve: 1. Generating reserve not connected to the system but capable of serving demand within a specified time. 2. Interruptible load that can be removed from the system in a specified time.

Contingency reserve requirements are set in the same general way insurance rates are set. We are all familiar with the idea that people with clean driving histories are rewarded with lower car insurance rates so it should come as no surprise that power systems with safer characteristics are similarly rewarded with lower CR requirements. Question is, what's the equivalent of a speeding ticket or a traffic accident for the power system? It turns out the power system has a points system.

Vocabulary Intermission part 2

Thermal: A term used to identify a type of electric generating station, capacity, or capability, or output in which the source of energy for the prime mover is heat. There's a tendency to associate the term thermal with fossil fueled power stations (coal, natural gas, oil) but this designation also applies to nuclear, geothermal and solar thermal power plants.

Hydro: A term used to identify a type of electric generating station, capacity, or capability, or output in which the source of energy for the prime mover is falling water.

Ramp Rate or Ramp: The rate, expressed in megawatts per minute, that a generator changes its output.

Firm Energy (G-F): NERC e-Tag code - This product may be curtailed only in the event of a reliability condition or to meet the Seller’s public utility or statutory obligations for reliability of service to native load. A G-F product cannot be interrupted for economic reasons.

Non-Firm Energy (G-NF): NERC e-Tag code - This product may be interrupted for any reason or no reason, without liability on the part of either the buyer or seller.

N-1 :A single system contingency event involving the loss of one component.

Points System - Step 1

Hydroelectric units can generally ramp up and down at higher rates than thermal units. This characteristic allows hydroelectric units to more readily respond to system contingencies. This responsiveness is a form of risk control and as such hydro units are only required to carry 5% in contingency reserves while slower acting thermal units need to carry 7%. So, if a power system is supplying load with 1000 MW of hydro and 1000 MW of thermal it will need to carry 50 MW of CR to cover hydro and 70 MW of CR to cover the thermal contribution. Note: This example assumes the thermal and hydro contracts are all Firm Energy products (G-F).

Points System - Step 2

At least half of the contingency reserve requirement will need to be in the form of spinning reserve.

Points System - Step 3

All non-Firm contracts will need to be 100% covered with contingency reserves. If the power system mentioned previously has 1000 MW of non-Firm Energy in addition to the hydro and thermal generation it will need to carry 50 and 70 MW of CR to cover hydro and thermal respectively as well as 1000 MW to cover the non-Firm Energy contracts.

Points System - Wildcard

Exceptional situations require system operators to carry contingency reserves above and beyond those described by the recipe above.

Friday, January 13, 2012

If I was in project development I'd be heading over to China. I think it's going to be the largest market for photoelectrics this year and for many years to come. We've seen the development booms over and over again - Spain, Czech, Italy and the U.K. With China you take things to another level. Labor is cheap... The supply lines are shorter... The manufacturers can grease things locally.

The incentives are high enough to drive healthy profits. They've got a few provinces (Shandong and Liaoning) with a FiT kicker and more will probably follow. I could see them being inverter constrained in 2012. This will lead to yet another supply chain shortage followed by a massive build out of inverter manufacturing capacity starting in the second half of this year. For about a year the inverter prices will climb up but once the new supply starts rolling in the inverter prices will be pressed down to 15 to 20 cents/Watt.

Thursday, January 12, 2012

A new 70% rule took effect January 1st in Germany. This rule limits the amount of backfeed from a PV system to 70% of the system's peak rating. This means a 10 kW system would only be allowed to backfeed a maximum of 7 kW. This new rule has been put in place to limit the costs of expanding the grid to accommodate peak PV. The annual losses to PV system owners are projected to be an acceptable 1 to 3%.

You kinda have to wonder, why 70%? Maybe it's because the annual losses are minimized. If that's the case you'd have to figure this may be the beginning of something. Perhaps next year the 70% rule will become a 60% rule and a 50% rule the year after.

Another thing to wonder about is why does a home with a 20 kW system get to backfeed 14 kW when a home with a 10 kW system may only backfeed 7 kW? This doesn't seem equitable.

All and all I like the rule. This rule does at least two things. First off, it limits the effect of PV peak on the grid and it does so at minimal cost. Second off, this rule may end up encouraging customers to use energy management systems (EMS) to utilize that 1 to 3% of lost production. And if the 70% rule with its 1 to 3% losses doesn't work maybe the 60% rule with its 10 to 15% losses will.

But then I think... if regulators want people to buy EMS systems why not simply mandate them? But then I think... well, the EMS systems aren't quite smart and cheap enough yet - maybe this is a transition strategy designed to encourage the adoption of EMS systems. Sorta like mandating that cars come with seatbelts, waiting several years for people to get used to them and then forcing people to wear them whether they want to or not. Kinda makes sense... Those damned Germans and their master plans.

Don Badley, NWPP Coordination Group, asked me to drop by and recount the history of the development of the 5%/7% Contingency Reserve criterion in WSCC.I don’t know why he did that – but I’m here.I explained to Don that I had, when I retired five years ago, given away or thrown away virtually all my files.Thus, I’d have to tell the story completely from memory. That’s OK, he said.On the other hand, I told him that, like most guys my age, my memory of discussions that took place more than 35 years ago is crystal clear.Frequently wrong – but absolutely clear.Despite that, I’m here.

Time for history…

Starting in the mid-60s, big things were happening in the electrical West.

Virtually all at once, the electrically isolated areas (1) the Pacific Northwest, (2) the RockyMountain area, (3) Northern California & Nevada, (4) Southern California & Nevada, and (5) Arizona & New Mexico, would be joined with synchronous ties – in some cases, with heavy-duty ties.

In each case, operators, who had long looked upon their colleagues in neighboring, but so far blissfully unconnected, areas either as clumsy Neanderthals or as insufferably arrogant and prissy aristocrats, now had to contemplate being shackled together forever, like those fugitives from the chain-gang in the movie. It was like the ultimate reality show – exciting, but scary as hell.

A succession of operations committees was formed in the years before the establishment of WSCC. When WSCC was begun in ’66 or ’67, the then existing Western Operations Committee was absorbed into the new organization as WSCC-OC.

Of course, WSCC-OC formed a Reliability Criteria for System Operations Working Group, and it, in turn, spawned an Operating Reserve Task Force. The Task Force comprised four people – Reed Canady, SCE; Bill Williams, SRP; Ab Watts, USBR; and I, NWPP Coordination Group.

The NWPP, which had been in existence since 1942, already had reliability criteria, as did the newly established CA Power Pool. AZ-NM, by virtue of the planning for 4-Corners and Navajo Plants, subscribed to the CA Criteria.

The negotiations rumbled on for many months, with Mr. Canady and me as the main protagonists

The NWPP’s Criteria defined the equivalent of Contingency Reserve to be 5% of load, all of which could be in the form of interruptible load or non-spinning generation, but it had to be realizable with five minutes to qualify

The CA Criteria defined the similar thing to be the larger of the biggest single contingency or 7% of load, all as spinning generator capacity. I don’t recall that there was any time limit for its pickup – if it was spinning, it was spinning reserve.

I don’t know the basis for the CA Power Pool’s 7%, and what I believe to be the basis for the PNW’s five percent is irrelevant to Operating Reserve.

Mr. Canady was adamant in rejecting interruptible load as Operating Reserve; it is clearly not automatically responsive to system contingencies. My biggest member utility, Bonneville Power Admin, was equally adamant about keeping it in – since interruptibility was seen as a contribution of value by the aluminum smelters and, therefore, was BPA’s justification for continuing to serve those loads

For the same lack-of-response reason, Mr. Canady would not accept shut-down capacity as spinning reserve

Likewise, the respective Pools were stubborn about moving off their chosen percentages, even though no one could explain, with rigor, how they were arrived at. Mr. Canady thought 5% was clearly “too low”. I rejoined that, applied to the NW, it was really much more conservative than the 7%, applied to CA. The largest contingency in the NW at that time was a GCL unit, at 125 Mw less than a half of one percent. The first contingency in CA was much larger, percentage-wise. Furthermore, the NW was almost totally hydro – hydro units could be started from dead-stop, synchronized and loaded within the five-minute criterion. Thermal units, constituting most of CA’s generation, required hours, in most cases, to start up and load

The arguments raged on for months

I believe it was Mr. Canady who finally proposed the diplomatic finesse: Contingency Reserve would be 5% hydro and 7% thermal. Thus, the NW would retain its 5% and CA would keep its 7%.

And I think it was I who reciprocated by proposing that, of the Contingency Reserve, a portion must be true spinning reserve, responsive to frequency deviations. That portion would be equal to one-and-a-half times the control area’s frequency bias, more or less half the Contingency Reserve – the rest could be interruptible load or anything else that can be activated in ten minutes.

The logic, or rationale, was that there is a basic amount of reserve capacity that must be provided to allow recovery to schedule within the ten-minute period, a portion of which must be spinning and responsive to keep the system operating smoothly and close to schedule.

We congratulated each other for our innovation and reasonableness and disbanded.

Now you know the truth. And you are shocked!! Shocked!! The actual origin of the five- and seven-percent figures is undocumented – probably, their adoption was largely based on what other pools were doing, but I can guarantee that no relevant, rigorous analysis was involved. Their application, respectively, to hydro and thermal has no basis in objective analysis of the characteristics of those kinds of generation – the numbers were established to smooth over what could have been endless debate between the two biggest pools in WSCC. Similarly, the split between spinning and non-spinning components of Contingency Reserve was adopted as a compromise between those same pools.

Does this lack of rigor matter to system reliability? No. I maintain that Operating Reserve is an issue almost totally of equity, NOT reliability. And equity is whatever the parties decide is equitable. I do believe that monitoring and compliance is very important; failure to provide agreed-upon reserve must not be allowed to become pervasive. Then it might, indeed, become a reliability issue.

Monday, January 9, 2012

I used to be a nuclear operator. A nuclear operator's job involves walking around the plant and examining all the equipment. You look at oil, steam, feed and electronic systems. You crawl around, you climb, you duck and so forth. You wear gloves, you carry a rag, a flashlight and maybe a knife - some guys have full on bat belts. Hope that explains my old job to some degree.

As I said my job involved climbing up/down ladders. Some of these ladders were quite tall and the height made many of us feel uncomfortable. Consider that the water and oil we worked with got on our hands and boots so when we climbed up tall ladders it was a no joke concern. We brought this concern up to our management. Management listened to our concerns but explained that the ladders were to code. I thought... hmmm... code eh? Why not just change the code? So I studied up on ladder safety rules. I contacted all the agencies that made the rules and I ping ponged my way up the regulatory chain of command via letters. In the end I was offered a seat on The Committee that was to review ladder safety rules. Unfortunately, the timing wasn't right as I had just gotten married and was in the process of quitting my job and moving.

This story doesn't have a great punchline but it does have a point. You don't need to play by the rules - You can rewrite them. This mindset adds some spice to normal thinking.

This is exactly the way we need to think of solar. It's not about following the old rules. It's about building new ones.

Friday, January 6, 2012

WAPO strikes again. This Cato Institute fellow says solar is a dream. His fact-light diatribe makes me wonder... Do think tanks think? As a kid I held these organizations in high regard - oh wow... a bunch of smart guys smoking pipes, programming computers manually and conducting weird experiments on college students inside an old cold abandoned water tank. That's some seriously interesting Manchurian Candidate shit... As an adult, I imagine a think tank as a collection of blue bloods sitting around in their underwear eating poorly and manufacturing low blood sugar rants.

Thursday, January 5, 2012

Started reading this study by Navigant Consulting. One part I found curious was that they didn't look at using Hoover to provide regulation. They said the reason for this was that Hoover operators would rather use the plant to peak shave. That makes sense but you've got to ask yourself, is the peak we see today going to be there in 5 years? At the very least you'd want to model whether photoelectricity is going to be depressing the market Hoover is planning to play in. If so, Hoover won't have that market anymore so they'd be open for regulation. The costs of regulating with hydro should be lower than combustion turbines. This is how I read the basic situation. Maybe I missed the blurb in the report that says they looked at these angles and determined that Hoover wouldn't have an incentive to change strategies. Will have to follow up.

The other obvious thing this analysis is missing is that neither NG or Hydro will be used for regulation as much as we tend to think they will. If I own a business or home with a photoelectric system I'm going to operate my plant to maximize profitability. If my photoelectricity is cheaper than the grid I am going to try to use that power when it is being generated and avoid using power when my system is not generating. I'm going to self-regulate. Self-regulation is way cheaper than NG or Hydro.

Funny Story... In Las Vegas the grid operators have what they call 500 megawatt clouds. What is a 500 MW cloud? Well... When a cloud rolls over Las Vegas all the air conditioners start turning down and/or shutting off because there's a lower heat load on the system. Add up all the homes, businesses, schools and such and you get about 500 MW. This makes me wonder - if we can deal with large load steps due to clouds shouldn't we also be able to deal with power output changes due to clouds? And in the case of Nevada, won't these effects tend to cancel each other out to some degree? When you reason it out the answer is yes - in a hot climate with lots of AC and lots of photoelectrics there will naturally be a cancelling effect. This natural balancing won't be perfect but it's better than a stick in the eye - at least it's not working against you. Kinda funny.

Wednesday, January 4, 2012

Ifrequently read that labor represents a small portion of photoelectric panel production costs. In Japan/US/Germany (JUGs) the statement holds water but it mischaracterizes the situation in low wage countries. Counter-intuitively, the labor costs (as a percentage of production costs) in low wage countries can actually be higher than what they are in JUGs. How could this be?

"One operator in a 9 hour shift with 1 hour break time processes 8*600 is 4800 cells per shift. Hence, a 500MWp production line, assuming an output of 4Wp per cell and 10 days holiday per year, needs 500.106 *1/4 * 1/(4800*255) = 102 operators."

In contrast, the numbers of machines, having an output of 2400 cells per hour, would be 500.106 *1/4 * 1/(2400 * 12 * 365) = 12. Assuming 1 to maximum 1.5 operators per machine leads to the need of 12-18 operators for the complete 500 MWp stringing process..."

A Boston Consulting Group document published back in December 2010 lists $2.10/hour.

OBVIOUS QUESTION #2: How much does an automated stringer/tabber cost?

Here's a current quote from a Chinese equipment manufacturer for a 600 cell/hour machine priced at 170,000 to 180,000 USD.

Here's an older 2009 quote from a German equipment manufacture for a 1200 cell/hour machine (page 27) priced at 590,000 Euro (456,000 USD)

For mathematical simplicity let's split the difference and assume a 1200 cell/hour machine costs 400,000 USD. So in the left corner we have a 500 MW factory with 24 of these machines and 15 technicians to operate the machines. I'm going to arbitrarily assume the machines last 4 years. Your rough annual costs are:

24*400,000/4+ 15*2000*2.10 = $2,463,000

In the right corner we have:

102 workers * 2000 hours/year @ $2.10 per hour = $425,000

This crude math indicates that manually stringing/tabbing is about 2 million dollars per year more cost effective than automation. Does a half-cent per watt really matter? Let's just say it's a start. What other considerations are there? Well, you have to pay for the automated stinger/tabber up front whereas you pay for labor as you go. This limits the flexibility of the automated factory considerably. If push comes to shove you can't furlough your automatic stringer/tabber and there's limited resale value. That said, the bigger consideration at work here is that I'm comparing China to China. What happens if we compare China to JUGs where industrial labor rates are more like $25/hour.

The right corner equation looks like 24*400,000/4+ 15*2000*25 = $3,150,000

So now we're up to a difference of 2,600,000 per year. OK... so what, it's still only a fraction of a cent/watt. Well, now consider the cost to build the factory? What if there's another half cent/watt in labor savings there? What if it's two cents? Consider the other labor intensive stages of production like module conversion. What if there's another penny or two there? What if there are savings associated with manually testing cells rather than automated testing?

This is meant to be an analysis but not an in depth analysis. I'm playing Devil's Advocate here. You have to ask yourself why China is using all that labor in their factories. When I looked into it the surprising answer I came up with is that labor can be cheaper than machinery. This means that when western fabs say labor is insignificant they aren't making an apples to apples comparison. They are talking about themselves. What may well be true for their manufacturing process is not necessarily true for the manufacturing process in China. I've only looked at stringing/tabbing. There's also ingots, wafer sorting, wafer testing, module conversion and so on. My gut feeling is that Chinese labor beats machinery in some of these areas as well - at least it does for now. So anyways, the next time someone says labor represents a small part of photoelectric production costs ask for proof.

Note that the stringing and tabbing process shown by Suntech is automated. In fact there's a hell of a lot of automation shown in the video. It's impressive really. At the same time you can still see plenty of labor manually picking and placing wafers. When I see this I wonder if they are saving money over fabs that use automation to do the same job. Maybe it's a penny here or there but pennies matter.

In 2011 system prices came down more than originally expected - from 2724 Euro/kW in Q4 of 2010 to about 2000 Euro/kW in Q4 2011. This represents a 26% drop when we were expecting a 13% drop. Even so the system prices didn't come down as far as the component prices did.

A price breakdown for 2012 could potentially factor in .75 Euro/Watt Chinese panels and .25 Euro/Watt inverters. This gives a new total of 1.469 Euro/Watt. Given favorable financing this price level will allow German PV owners to generate electricity for slightly under 10 cents/kWh. This is lower than the household electricity prices of all the countries in Europe save Bulgaria.

Will we see this price level this year? Who knows... maybe. Current prices are getting quoted out at 1600 to 1800 Euro/kW so we're already in the zone.

Update: Here's a price breakdown for a 5050 Watt system on the Sunelec site.